Health Insurance Premiums Continue To Rise For Employees, But Wages Lag

The cost of health insurance for people who receive coverage through their jobs continues to rise, but wages are not keeping up with these increasing costs.

According to a survey released Oct. 8 from the Kaiser Family Foundation, the average annual family premium for employer-sponsored insurance rose 4 percent to $21,342 this year. Employee salaries and inflation each rose 3.4 and 2.1 percent, respectively.

Health care costs have been on the rise for years, said Tom Campanella, health care executive in residence at Baldwin Wallace University. The circumstances are only going to get worse because of the pandemic, he said, with some people facing reductions in salaries, layoffs, and losing their jobs, all of which can affect their health care if they receive insurance through their workplace.

Now, more than ever, he recommends people shop around and compare prices of different medical providers in their community.

“You need to be able to search that,” Campanella said. “That will help you reduce cost, but also have a positive impact on your employer.”

Employers are looking for strategies to deal with the rising health care costs as well, he said. Campanella anticipates employers will consider making changes to their insurance coverage by transitioning to self-insured plans.

Under that type of plan, the company pays employee insurance claims themselves, often through a third-party business, rather than paying an insurance company to process the claims.

This incentivizes employees to look for the most cost-effective medical options, Campanella said.

“Employers and individuals need to recognize during this time of challenge, it’s important for you to be able to demand value both of your providers, and be willing to search for value providers in the marketplace,” he said.

Health care costs will only continue to rise this year, Campanella said, because people are going in for appointments and surgeries they delayed at the beginning of the pandemic due to COVID-19 concerns.

The Kaiser survey also found employer health benefits often do not offer workers many options for mental health services. 

The majority of companies surveyed were dissatisfied with the lack of mental health and substance abuse providers available in their insurance plans.  

Mental health care has already been neglected for years, Campanella said, and this problem will only get worse with the stress workers are experiencing during the pandemic. 

“That has to become more of a priority because mental health and clinical health … of the individual are interrelated,” he said.

The survey was conducted from January through July 2020.